James Ransom
Following 2018’s survey of heads of enterprise in UK universities, and 2019’s survey of senior higher education leaders, we launched the university heads of enterprise report 2020 this morning, swapping the Houses of Parliament for Zoom.
Read the full report online here (PDF), and get in contact to discuss assessing your university’s performance against the data.
(Photo by NASA on Unsplash)
I wrote the following piece for the recent Royal Society report on research clusters, republished here under a creative commons license. The full report has eight case studies (see my previous posts on Pittsburgh and Israel). Individually, they tell the story of how the actions of leaders, businesses, universities and communities have affected the development of different places with different contexts and histories. Combined, patterns and trends begin to emerge. The story of Uppsala in Sweden is one of a long history of industry and academia working closely together.
The life science industry in the Stockholm-Uppsala region began to attract international headlines in the early 2000s. A special section in Nature lauded the ‘world class scientific and business environment’.1 The Economist described Uppsala alongside Cambridge in the UK as one of the most biotech-dense cities in the world.2
The region is Sweden’s largest life science cluster, home to just over half of the country’s life science industry (over 20,000 employees), five universities and 650 life science companies.3 Over the past decade, 15 to 20 new life science companies were formed in the region each year.4 Stockholm-Uppsala usually ranks in top ten European biopharma clusters, and the sector was recognised as a national priority with the establishment of an Office for Life Sciences in 2019.5
Despite the concentration of academic and industry activity, opinions differ on whether the cluster should be defined as an ‘Uppsala cluster’ or as part of the wider Stockholm-Uppsala region. We will refer to the Uppsala cluster, whilst recognising that activity spans different spatial dimensions: from informal networking and labour market dynamics at a regional level, to business and academic relationships that span the globe.6 Uppsala itself is just 70km from Stockholm and activities often bridge the two. With an international reputation as ‘the city of methods’ due to a traditional focus on the production of biotech research tools, Uppsala has a long history of industry and academia working closely together.7
The cluster builds on Sweden’s solid foundation for life sciences research. The country has a good environment for conducting clinical trials, and has invested in electronic patient records and similar databases. Intellectual property rules allow researchers to retain patent rights in their work – seen by some as encouraging entrepreneurship, but by others as blocking technology transfer. And the country ranks fifth in Europe for the number of products in its clinical development pipeline.8 Upon this foundation, but with roots stretching back to the 1920s and periods of growth and uncertainty, the Uppsala cluster emerged.
The Uppsala life sciences cluster has much in common with the development of other notable clusters: a strong university research base, a proliferation of innovative firms, and key individuals who mobilise and attract funding and garner wider interest in their work. It also has a popular origin story of a cluster born out of adversity – when in reality the life sciences activity in the region today is the product of decades of work (Pittsburgh has a similar narrative).
However, the literature on Uppsala has a pronounced focus on three elements in particular: institutional changes and restructuring over time, the impact of the media, and the role of cluster initiative bodies. The story of Sweden’s largest life sciences cluster will be told through these areas of focus.
The roots of the cluster can be traced to biotech research conducted at Uppsala University during the 1920s and 1930s. However, larger-scale industrial activity was sparked by the Swedish pharmaceutical company Pharmacia relocating from Stockholm to Uppsala in the 1950s. A major reason for the move was a history of collaboration between Pharmacia and a research unit at Uppsala University built on the contribution of two Swedish Nobel Laureates in chemistry: Theodor Svedberg and Arne Tiselius.9
In 1995 Pharmacia, then one of the largest pharmaceutical companies in Europe, merged with the US company Upjohn, leading to protracted restructuring and relocating – including the move of some R&D and marketing activities to the US.10 Product and research focus shifted to match those of the new owners. The company adopted an American business culture: ‘competence originated at the top of the company and filtered down through the organisation’ – at odds with the Scandinavian culture of delegated decision-making.11 Around 200 research and managerial positions were moved out of Uppsala; the move was initially seen as striking a huge blow to the region.12
The merger was the culmination of a series of spin-offs, reorganisations and sales, significantly changing the life science landscape of the region. As Pharmacia withdrew, a new narrative began to emerge. Former Pharmacia researchers and managers, it was perceived, were freed from their corporate shackles and channelled their energy into new enterprises; the vacuum left by company’s withdrawal led to a frenzy of entrepreneurial start-ups and innovative ideas.13 Soon after, there was an influx of new capital to the cluster, further boosting the growth of life science research and enterprise in the region.
The reality is slightly more complex. As subsequent research has found, the capital was not sourced locally, but from foreign investors and venture capital firms in the greater Stockholm region attracted by the technologies developed at Pharmacia.14 And, in a detailed deconstruction of the popular narrative, Alexandra Waluszewski has shown how the emergence of the Uppsala cluster is not simply the result of (or the aftermath of) a single critical event, but the interaction of ‘stable and healthy’ industrial and academic units over at least 70 years.15 She concludes that:
a closer look at the ‘‘new’’ life science/biotech companies’ population in the Uppsala region reveals that most of them have a long history. The majority have their resource roots in projects initiated long before the restructuring of Pharmacia. Many of them have existed for decades, sometimes as visible companies, sometimes hidden as projects within different parts of the universities or companies. The small company Medical Products Octagon is an illustrative example. The company was established in 1971 but existed as a project in the early 1960s. As one of the initiators, Professor Uno Erikson, explains: ‘‘We were many researchers with our daily work at the University hospital, within such disciplines as anaesthesia, physiology, radiology, cardiology, etc., and continually experienced technological problems connected to available equipment and material. It was this displeasure, and particularly all the negative effects we saw on the patients, that triggered us to use our medical knowledge for the development of new technological solutions. However, for decades we were forced to handle this work—development of new solutions, patents and licenses—in secrecy. For a professor at Uppsala University running a business was regarded as very suspect’’.16
As such, several key organisations including Uppsala University and its research hospital, the University of Agriculture, the biotech instrument producer GE Healthcare, and Phadia (blood test systems) have acted as ‘anchor’ institutions, and have had an important role in the formation of many new companies.17 This includes through spin-outs, knowledge generation and dissemination, and access to research labs, but also customer and supplier connections, sharing of prototyping expertise and production facilities, and business support and advice. Growth has also been stimulated by governmental agencies located in Uppsala, including the National Veterinary Institute and the Medical Products Agency.18
However, this does not diminish the importance of Pharmacia in shaping Uppsala’s life sciences cluster. Both GE Healthcare and Phadia have their roots in Pharmacia’s restructuring (and interactions with Uppsala University’s Department of Biochemistry); Pharmacia itself is now part of Pfizer and retains a presence in the region. Indeed, seven of the ten largest companies have some form of Pharmacia heritage.19 A second legacy is the significant local knowledge pool in several biotech areas; the development of specialised methods, instruments, and research tools is considered the traditional core of the cluster and underpins Uppsala’s reputation as a ‘city of methods’, whilst differentiating it from national competitors.20
The role of the media is a second, and related, theme in discussions of Uppsala’s cluster development. Initial media coverage portrayed the 1995 Pharmacia merger as a crisis and a devastating blow for the region, asking questions of the trustworthiness and strategy of company directors. By 1998 stories reflected a narrative of a community united and collaborating to shape the future: that Pharmacia relocating was ‘the best thing that could have happened to Uppsala’, and ‘laid-off researchers in Uppsala have turned local developments around’.21
Regardless of whether this ‘catalytic event’ narrative reflected the reality, it had an impact. The expanding biotech sector in Uppsala became a hot topic. It affected how government actors engaged in regional development and infrastructure planning in Uppsala. It influenced how customers, suppliers, venture capitalists and potential employees viewed the cluster.22 As such, the media helped to construct a ‘perceived regional advantage’, providing the necessary channels to ‘promote investment opportunities and attract new capital’.23 Several bodies, including STUNS (the Foundation for Collaboration between the Universities in Uppsala, Business and the Public Sector) and the Chambers of Commerce, have been linked to commissioning media articles on the region’s biotech resurgence during this period.24
A third factor is the part played by cluster initiatives: collaborations between public and private sector bodies, including government agencies, universities and companies, to improve the competitiveness of clusters. Uppsala BIO was created in 2003 by local representatives from government, industry, and academia.25 Cluster initiatives raise the awareness of the work within a cluster, provide platforms for dialogue and decision-making (especially around the business environment), and perform the important intermediary activities of brokerage, facilitation and promotion.26 A study of Swedish cluster initiatives found successful bodies struck a balance between being relevant for members and being open to new perspectives; Uppsala BIO offers training and networking for Uppsala’s life science industry, but also ‘open house’ networking and knowledge-exchange activities.27 Promotion and marketing has been an important thread in Uppsala’s life sciences cluster development, and Uppsala BIO is part of this continued effort. But this cluster initiative also reinforces the foundation upon which the cluster has grown: a long history of universities and industry working together.
There have been notable outcomes throughout the history of the Uppsala cluster. Swedish academics have found that the cluster played an important role in national economic restructuring from the 1970s, and was the engine of national life science growth.28 Specifically, academic and industry collaboration led to the discovery of Sephadex, a gel filtration medium, in 1959, and immunoglobulin E, used to diagnose and treat allergies, in 1967. And this collaboration more generally led to the growth of Pharmacia as one of Europe’s largest pharmaceutical companies, an important actor in the economic growth of the region, and a convenor of talented researchers and managers. As such, Pharmacia has been described as ‘the third University’ in Uppsala (together with Uppsala University and the Swedish Agricultural University).29
The result today is a mature ecosystem. There are several markers of this. First, the growth of specialised services firms in and around the cluster, including in business development, patenting and legal advice, recruitment and marketing.30 Specialised consultancy firms also help to fill gaps within biotechnology start-ups.31 A second marker is the growth of informal contact between industry and academia, built over time on the foundations of formal relationships. The result of this physical and social proximity is the rapid circulation and spillover of knowledge and ideas within the cluster, well-developed social networks, and easy access to global contacts and channels. Individuals can easily switch firms and move from industry to academia and vice versa, transferring knowledge and further strengthening relationships.32
Despite strong collaboration and professional mobility within the cluster, there are differences between public and private sector organisations, and – as one might expect – differing views on the priorities and strengths of the cluster. Their interactions differ too, perhaps to the overall benefit of the cluster. Public sector organisations tend to interact more with biotech companies at a national level than their private sector counterparts, whereas private sector companies interact more often with biotech companies at an international level. Both, however, rank the cluster’s work in developing methods and tools for discovery as the greatest strength, followed by diagnostic work.33
The Uppsala cluster is closely intertwined with inward investment efforts from Invest Stockholm and other bodies, in targeted areas such as applying artificial intelligence and machine learning to life sciences, and health tech.34 This builds on Stockholm-Uppsala Life Science (SULS), a joint effort between Uppsala BIO and Stockholm city to actively market the region’s life science outside of Sweden which began in 2007.35
Previous analyses have found that the venture capital sector in Uppsala is heavily underdeveloped in terms of the number of local actors.36 However, this is perhaps symptomatic of the country as a whole, rather than an issue of local provision: an earlier study found that 84 percent of venture capital invested in Swedish drug discovery firms was in the Stockholm-Uppsala region.37
Finally, and despite high quality R&D, Sweden faces challenges that may affect the cluster. These include the level of patenting, and small companies facing a choice between licensing products to ‘big pharma’ or being acquired. This has led to fears of stunted company growth, inhibiting the development of a thriving, home-grown sector.38
(Photos from Unsplash: archway, train, buildings)
The following post is taken from my contribution to the recent Royal Society report on research clusters, republished here under a creative commons license. The full report has eight case studies (see my previous piece on Pittsburgh). Individually, they tell the story of how the actions of leaders, businesses, universities and communities have affected the development of different places with different contexts and histories. Combined, patterns and trends begin to emerge. The story of Israel’s technology sector is closely intertwined with the complex history of Israel itself.
Israel, owing to its prolific track record of establishing innovative information and communications technology (ICT) companies, has earned itself the moniker of ‘start-up nation’. A 2011 book, taking this moniker as its title, described how Israel (with a population of just under nine million) had more companies on the Nasdaq stock exchange than South Korea, Japan, Singapore, India and all of Europe combined, and the highest density of start-ups per person in the world.1
Others describe Israel’s technology cluster as ‘Silicon Wadi’, after the concentration of high-tech firms along the coastal plain. Activity is concentrated in metropolitan Tel Aviv – including the affluent suburbs of Herzeliya, Ramat Gan and Ra’anana – and Haifa in the north (home to Matam Technology Park, Israel’s first and largest high-tech business park), together with the second city of Jerusalem. Including some secondary areas, such as the corridor south from Tel Aviv to Be’er Sheva and the Western Galilee, the cluster covers an area no larger than 6,000 square kilometres – half that of the extended Silicon Valley in the US.2
Around 1,400 start-ups are created every year in Israel and some 800 shut down.3 In total, there is roughly one start up per 1,400 people. In comparison, France has 0.112 startups for every 1,400 people, Germany has 0.056, and the UK has 0.21.4 This growth is not just a recent phenomenon. According to the IVC Research Center, 10,866 high-tech companies were established in the period 2010 to 2019, with 98 listed on the Nasdaq, and 369 accelerators and 24 incubators established. Since 2010, capital raising by Israeli tech companies has risen by 400 percent and the number of deals by 64 percent.5
Amid this explosion of numbers, questions have been asked whether Israel needs to transform from start-up nation to scale-up nation, or if too many young enterprises are being bought out by international companies.6 Others suggest the start-up scene has already matured: Israel’s cluster of high-technology industries emerged in the late 1990s. Since then many companies have grown substantially, and the country hosts large research and development (R&D) sites for many multinational technology companies.
These developments, and the orientation of the Israeli economy, are reflected in statistics for both exports and research and development. ICT services form over 45 percent of Israel’s service exports, compared to 7 percent for the UK, and 9.5 percent for high-income countries as a whole.7 Israel’s research and development expenditure, at 4.58 percent of GDP, towers above the UK (1.67 percent), and the high-income country average (2.57 percent).8 And Israel has 8,250 R&D researchers per million people, compared to 4,377 in the UK and 4,196 in high-income countries.9
The story of Israel’s technology sector is – more so than many other clusters – also a tale of the country’s national development. The emergence of the Israeli ICT cluster is the result of several complex and interrelated factors including culture, geopolitics, state intervention and broader government policies. Some of these factors, as we will see, can be double-edged swords, and few are easy to replicate (despite the Israeli model being cited as inspiration in other countries).10
The emergence of Israel’s technology cluster can best be explained through direct factors – historical decisions shaped through geopolitical circumstances and government interventions – and contributory or enabling factors that include broader government policies, cultural influences and the military.
In an article on ‘Clusters as Innovation Engines’ published in the European Management Review, the authors claim that some of the world’s most powerful innovation clusters, including Tel Aviv, are relatively young and their origins cannot be traced to historical reasons as implied by cluster theory.11 This isn’t quite accurate: whilst the emergence of an Israeli technology cluster took place in a concentrated period of a few decades, the roots of this cluster can be traced to Israel’s founding in 1948.
Two constraints since then have encouraged innovation. First, Israel is resource-poor. According to Shimon Peres, former Israeli President and Prime Minister, ‘high-tech in Israel began with agriculture… technology was 95 percent of the secret of Israel’s prodigious agricultural productivity’.12 Today, the legacy of agricultural kibbutz (collective community) movements is felt in a proclivity for shared working and teamwork, and the converting of municipal facilities such as city libraries into incubator start-up spaces.13 And Israel’s national emphasis on agriculture and agricultural technology helped the transition into what is today a healthy biotechnology and life sciences cluster.14
A second constraint is the geopolitics of the region. Even when Israel has not been at war with its neighbours, the relationship has been uneasy and borders closed to people and goods. This has meant a focus on innovative solutions and high-tech development as a form of protection, and a need to think globally and develop exports for more distant markets; software and services are easier to sell half way around the world than heavy machinery. Israel was then well-positioned to benefit from the global shift towards knowledge- and innovation-based economies.15
The Israel Defence Forces, given a central national role as a direct result of these geopolitical constraints, was a driving force of Israel’s emergence as a technology cluster. Military innovation accelerated following the French embargo imposed on Israel after the 1967 Middle East war, requiring Israel to develop its own military technology.16 Many commercial technologies have emerged from highly-specialised Israeli military R&D, from fibre-optics and voice compression to networking software and devices; Israeli military intelligence had a computer training unit as early at 1960 helping establish world-leading expertise that was later commercialised.17 As important as the technology itself, however, was flow of people with the skills and leadership ability to manage technology companies, and deep experience of working on cutting-edge innovations.18
Israeli high-tech firms began to form in the 1960s, albeit at a slow pace.19 ECI Telecom was founded in 1961, and Tadiran and Elron Electronics in 1962; Elron is seen as the ‘Fairchild of Israel’ after the legendary Silicon Valley firm. Yet the cluster truly emerged in the mid-1990s, as the rate of successful companies grew from 1-2 per year to 10-20. de Fontenay and Carmel attribute this to the emergence of ‘specialised cluster intermediary services’ such as venture capital and legal services, services which also had professional networks in the United States, the major market for Israeli companies. Strong interpersonal networks and direct experience then allowed new firms to grow more quickly.20
Broader developments helped the cluster’s growth. Global telecommunications and internet booms in the 1990s increased demand and led to several high-profile acquisitions of Israeli companies.21 Shifts in the computer industry from hardware to software products greatly benefited Israel, particularly owing to the demand from businesses for security tools – several of which had been well-tested within Israeli military communications networks.22 Finally, the 1993 Oslo accords with the Palestinians encourages large companies such as Cisco, Motorola, IBM, Microsoft and Hewlett-Packard to invest heavily in R&D centres in Israel, helping to build international networks, expand employment opportunities and develop skills.23
Government interventions have directly stimulated the Israeli technology cluster, with the state nurturing the development of a venture capital industry. Several initiatives stand out. Yozma (Hebrew for ‘initiative’) began in 1993 with 100 million USD and established 10 venture capital funds with the aim of attracting foreign direct investment into Israel. Investors were offered matched funding at the rate of two dollars from the government for every dollar committed by a foreign investor. Equally generous was the option of buying out the government’s stake in the fund after five years. The fund has grown to manage billions of dollars of capital today.24
Other important initiatives include the Office of the Chief Scientist (now Israel Innovation Authority) R&D Development Fund, which gives new R&D facilities access to interest-free loans to match private investment, and the Israel-US Binational Industrial Research and Development Foundation (BIRD) fund, financed by both governments. BIRD ‘played matchmaker’ between an Israeli company with innovative technology and a US company who could distribute and market the product. Although the financial incentives were helpful, the largest impact was to teach young Israeli companies how to do business in the US.25 The state has also reduced bureaucracy, simplified tax regulations, and established incubators.26
Finally, two further factors have enabled cluster growth. The first is the influence of the unique Israeli military culture, pervasive in Israeli businesses because of compulsive military service (for at least two years from the age of 18). The Israel Defence Forces have an unusually flat hierarchy, leading to informal communication with superiors (and the willingness to challenge authority), great flexibility, the development of strong leadership skills, and experience of shouldering considerable responsibility at a young age: all skills that translate into strong entrepreneurship and teamwork in business.27 The strong networks formed in the military – often with people from different backgrounds – are then maintained through reserve duty for many years following military service.28 Alumni who met whilst working in the elite military units (particularly in intelligence) have spawned many high-tech companies, and graduates from these units are often the recruitment targets of major US technology companies.29
The second contributory factor was a large stock of human capital. Levels of education and technical skills are high, supported by world-class universities such as the Israel Institute of Technology (called the Technion) and the Weizmann Institute of Science. But the Israeli government’s open immigration policy towards Jews has also provided a significant inflow of talent. When the US tightened immigration in the 1990s, Israel saw a dramatic increase in immigration of often highly-educated Jewish immigrants from former Soviet Union nations – in ten years the population grew by 800,000, or one fifth; the number of engineers in Tel Aviv doubled. Given the traditional strengths of Soviet Union countries in theoretical sciences, Israel became ‘a superpower in mathematics’, as well as gaining knowledge of proprietary technologies and different methodologies.30 These enabling factors helped provide fuel for the Israeli technology cluster, and in turn for the growth of the nation.
By the late 1990s, the Israeli technology cluster was internationally connected and strongly entrepreneurial, based on deep stocks of human capital and local knowledge. The source of this innovation was commercialisation of military technology and university R&D, supported by flows of skilled workers and a government interventions to promote investment and generate capital.31 Although the acquisitions of several Israeli companies and the opening of large R&D plants put the country on the global innovation radar, it was the result of decades of government-led economic development rooted in efforts to secure national security and high-tech growth.
There are several key outcomes of these developments. First, Israel’s technology cluster overcame its geographic isolation to work effectively with distant – primarily US – markets by building on world-leading expertise and targeting business customers who require less face-to-face support.32 Professional ties with other clusters, such as Silicon Valley, are strong and aided by the diaspora concentrated in New York and Los Angeles. Concerns over brain drain, as young Israelis look to study and work abroad, are countered by new networks formed and the return of expatriates – often many years later – to set up regional offices or to champion investment and R&D centres in Israel.33
Second, a mature venture capital industry has emerged in Israel. More than 430 professional investors (including venture capital firms, private equity firms and incubators) have a permanent presence in Israel; just under a quarter of these are non-Israeli. Nearly 1,500 investors, representing more than 30 countries, invested in Israeli companies during 2018.34
Third, the Israeli culture – a somewhat intangible factor that draws on the collectivist origins of Israeli society and the nature of the military – has offered a competitive advantage. In addition to the factors explored in the section above, it has been suggested that collectivism and military service translates into loyalty, strong teamwork and lower turnover in the workplace compared to competitor nations. This might mean, for example, faster development times and greater retained knowledge when designing new computer chips – which often have long development cycles.35 However, despite these considerable advantages, the Israeli technology cluster faces several challenges that spring from each of these three outcomes.
One might imagine that the spectre of instability and violence, which served as the impetus for Israel’s focus on national growth and security, might also undo confidence in the ability of Israelis to innovate, and undermine investment in Israeli companies. Senor and Singer argue in Start-Up Nation that the determination of Israeli entrepreneurs to continue innovating in the face of war makes the country more enticing for investors.36 An analysis of the effect of Palestinian terrorist attacks during the second Intifada (2000-2005) found that despite being profoundly affected by terrorism, Israeli society was not demoralised by it because the public possessed a high level of social resilience – fostered in part by the cohesiveness of Israeli-Jewish society.37 Although violence continues to be a risk factor, more prosaic factors are perhaps of more concern.
First, the cultural attributes that lend themselves to entrepreneurialism may be a double-edged sword. The Israeli high-tech community has been accused of inattention to detail, indifference to quality, an unscalable management culture, and poor customer service. In particular, the management culture may be hindering the growth of companies, with few growing larger than 1,000 employees.38 Others fear that the ‘national characteristic of brusqueness is better suited to the creative process, not the nurturing of long-term projects’.39
Second, there is concern that start-up founders are too focused on buy-outs (and big pay offs) from overseas companies or public listings, instead of growing large businesses.40 Connected to this are perennial fears of brain drain and an exodus of talent to the US.41 These fears are heightened by a shortage of skilled software engineers, with five jobs for every applicant in the sector. Efforts to bridge the gap include alternative training programs such as tech boot camps, and boosting recruitment of women and Arab and ultra-Orthodox Jewish minorities, who are all under-represented in the sector.42
(Photos from Unsplash: street, square, skyline)
This post originally appeared on the Yorkshire Universities website.
Nesta recently launched a report exploring how cities and regions collaborate internationally on innovation. If done effectively, international collaborations offer the opportunity to hit multiple policy priorities: levelling up regions, boosting investment in R&D towards 2.4 percent of GDP, and strengthening overseas relationships post-Brexit.
Cities and regions have a long history of forging overseas relationships directly with international partners. So-called ‘municipal internationalism’ thrived in the nineteenth century, culminating in the formation of the International Union of Local Authorities in 1913. Today, ambitious city regions across Europe have overseas offices (often in Brussels) and a complex web of relationships around the world. As Shane Ewen and Michael Hebbert put it, ‘the spirit of the Hanseatic League is alive and well in Europe’s town halls’.
There has been renewed interest in the topic in recent years. ‘Decentralised Development Cooperation’ is promoted by the likes of the OECD as means to help cities and regions achieve the UN Sustainable Development Goals. City diplomacy is an established academic field. I even published some musings of my own on the topic back in 2016.
The Nesta report is, however, valuable for considering how international collaborations can boost policy innovation (for leaders and governments), systems innovation (to address longer-term systemic issues of institutional capacity) and partnerships innovation (between government and business, universities, and other institutions) at the local level. The latter, in particular, is significant. Michele Acuto has observed that the average distance between a city hall and the closest major university is just under four kilometres in four of the major city networks. Strong, strategic partnerships at local level can only help strengthen international ones.
One effect of COVID-19 will be a greater role for universities and other civic bodies in regional collaborations. According to the report, ‘these are repeatedly viewed as critical and under-tapped intermediaries in peer-to-peer collaboration, because they have additional and more durable capacity as well as the ability to pedagogically transmit key principles, codify lessons and develop processes for distributed on-the-ground implementation’. Initiatives such as the EUniverCities network, in which medium-sized cities and their universities work together, offer a glimpse at what this may look like as a formalised structure.
For Yorkshire, the relationships that exist in the region between universities and LEPs, Combined Authorities, metro mayors, and local authorities provide a solid base to build upon. Both local government and the region’s universities have a wide set of relationships with counterparts around the world. The extent of city twinning in the region (which exploded in popularity after world war two) provide an insight into the range of partners: Hull is twinned with several cities, including Rotterdam in the Netherlands and Niigata, Japan. York and Bradford both have twins in France and Germany. Sheffield’s twins include Chengdu in China, Kawasaki, Japan and Pittsburgh, United States. Leeds is twinned with several cities including Hangzhou in China, Dortmund, Germany, and Durban, South Africa.
The multiple policy priorities of levelling up, boosting investment in R&D, and strengthening overseas relationships – ambitious even before COVID-19 struck – mean we need to bring universities into the centre of efforts to collaborate internationally on innovation. This would provide a timely boost to the concept of ‘Global Britain’.
I wrote the following piece for the recent Royal Society report on research clusters, republished here under a creative commons license. The full report has eight case studies. Individually, they tell the story of how the actions of leaders, businesses, universities and communities have affected the development of different places with different contexts and histories. Combined, patterns and trends begin to emerge. The story of Pittsburgh is one of a slow recovery fuelled by investments with long-term returns, and a slow accumulation of talent and expertise.
The Pittsburgh cluster is perhaps best described as several clusters with some areas of overlap. The Pittsburgh Innovation District lists these as life sciences and digital health, advanced manufacturing, and AI and robotics, whereas the Brookings Institution identifies manufacturing, technology, and health care as key clusters.1 These industries have grown by 8.4 percent, nearly double Pittsburgh’s private-sector growth rate, since the end of the recession in the early 2010s.2
Businesses in these clusters work closely with the university sector. The University of Pittsburgh is recognised as a leader in life sciences research, the University of Pittsburgh Medical Center (UPMC) is a top-ranked hospital system with 89,000 employees and 40 hospitals, and Carnegie Mellon University has specialist expertise in computer science and engineering.3 The metropolitan area outperforms the national average on academic activity, ranking ninth among the largest 100 cities for the amount of university research and development, and performs particularly strongly in fields such as robotics, gerontology, critical care, artificial intelligence, cell and tissue engineering, neurotrauma, and software.4
The Oakland district is the academic and healthcare centre of Pittsburgh, and is an example of two much-vaunted developments: an innovation district home to a dense, walkable hub of economic activity for research and entrepreneurship, and a shift from heavy industry to ‘eds and meds’, with the knowledge-rich ecosystem that accompanies universities, large hospitals and their spinoffs and spillovers.5 As the Brookings Institution has noted, few cities have such a naturally occurring innovation district as Pittsburgh: Oakland represents three percent of the city’s land area, ten percent of residents, 29 percent of jobs, and over a third of the state of Pennsylvania’s university research output.6 As such, challenges remain in ensuring inclusive growth in neighbouring districts (which have some of the highest rates of long-term unemployment and poverty in the city), connecting communities to new opportunities, and addressing regional inequalities.
Pittsburgh’s performance is often framed against the collapse of the steel industry in the city in the 1980s, when the unemployment rate in the city hit 18 percent. Prior to the collapse, manufacturing represented more than a quarter of all employment in Pittsburgh; today manufacturing accounts for under ten percent of employment. More people work in Pittsburgh’s health sector today than in the steel industry at its highest point.7 Although this transformation is remarkable, the seeds for Pittsburgh’s resurgence were planted long before the collapse of the steel industry in the city.
By 1983, Pittsburgh – seen as the industrial powerhouse of the US – was in economic breakdown. The Pittsburgh Press newspaper described it as a tide of change: ‘town by town, factory by factory, job by job’.8 Three quarters of Pittsburgh’s steelmaking capacity and 130,000 manufacturing jobs were lost, and tens of thousands of residents moved away – with knock-on effects for the businesses and services which remained.9
In the following decades, the economy shifted from low- and moderate-value production to technology-driven services and high-value advanced manufacturing. This shift was led by a focus on innovation, driven by federally-funded research at Carnegie Mellon University and the University of Pittsburgh.10 But an overarching theme of Pittsburgh’s story is a slow recovery fuelled by investments with long-term returns, and a slow accumulation of talent and expertise. It is necessary to trace the roots of today’s research clusters to the height of the steel industry in Pittsburgh.11
Important (but some, at the time, seemingly modest) investments were made in three areas in the 1950s.12 The first was a partnership known as ‘Renaissance I’ between local government leaders and Pittsburgh’s business community (under the banner of the Allegheny Conference). The aim was to improve the quality of life in the city and address the region’s environmental and infrastructure issues. Real estate development was channelled through public authorities, deserted train sheds were converted to house and offices, cultural attractions were built, and transport and sanitation improved.
The second investment was a donation of $50 million from the local Mellon family to the University of Pittsburgh to build and run a new medical school. The creation of a world-class medical research institution set a foundation for the region’s biomedical research strengths today. The third set of investments follows from this: that of the philanthropic community who grew wealthy from Pittsburgh’s industry. Funding from philanthropic foundations has ensured the survival of much of the city’s cultural infrastructure from the Symphony Orchestra to community arts organisations – an essential ingredient in creating an environment for attracting and retaining skilled workers. More recently, foundations in the city have tended to view economic development through technological innovation as a core part of their social mission. Philanthropic investment has, for example, helped transfer robotic and automation technology from the lab to the city for real-world testing, and was central to starting programmes of work on machine learning, computational finance, and robotics at Carnegie Mellon University.13 The close relationship between philanthropy and universities has a long history in Pittsburgh, and is central to shaping the city’s development.
These investments bore fruit years after the collapse of Pittsburgh’s steel industry. They are not, however, responsible alone for the creation of Pittsburgh’s research clusters. Upon this foundation, the local universities and local government (and, in particular, their leaders) played a key role, supported by federal and state grants.
As unemployment soared, the heads of Carnegie Mellon University and the University of Pittsburgh – historically competitors – decided to coordinate efforts to diversify Pittsburgh’s economy and drive research and development in the city.14 In 1978 Carnegie Mellon University, led by Richard Cyert, established the Robotics Institute with corporate funding, and planted the seed for the city’s expertise in this area (the CMU Robotics Institute also became the first in the world to offer a PhD in robotics).15 Heaton et al describe the investments made by university and local leaders in new technologies in Pittsburgh – others included biotech and computing – as ‘sensing activities’. These are ‘long-gestation investments’ that are the first stage of a new innovation ecosystem (with no guarantee they will pay off), and which ‘assess internal and external signals about scientific and technological developments that hold promise for the future, then ensure that sufficient financial and faculty resources are available for exploring the most attractive possibilities’.16
In 1986, with University of Pittsburgh Chancellor Wesley Posvar’s guidance, all of the city’s hospitals, teaching hospitals and research facilities were brought together under one not-for-profit roof – known today as UPMC. And as Carnegie Mellon University sought out the best researchers to relocate in Pittsburgh, the University of Pittsburgh persuaded medical experts to join, including pioneers of organ transplantation – helping to establish the city as a world-leading centre in this area.17
The universities have continued to play an important role in shaping Pittsburgh’s research and innovation clusters. When Jared Cohon stepped down as Carnegie Mellon University president in 2013, he identified three key ways the institution helped Pittsburgh’s economic shift: by making it easier for professors to start new companies by changing the technology transfer policy, by collaborating with the University of Pittsburgh to support start-ups, and by building the Robert Mehrabian Collaborative Innovation Centre.18 This centre opened in 2005 and was funded by state, university and private money, allowing companies and researchers to work collaboratively.
State and federal governments have also played an important role. Both provided grants to research universities and seed funding to entrepreneurs in technology-related fields. As Holstein and Eschenfelder conclude, state-funded accelerator programmes:
reduced information asymmetry and externality problems that inhibit the birth of new enterprises. Their highly selective application process reduced cost to angel investors and venture capital firms of searching for early-stage startups with high commercial potential. The rigorous and short-term duration of these programs accelerated growth of some startups, but also accelerated failure of others enabling resources to move to higher valued uses. These programs also linked potential tech entrepreneurs to a network of mentors who provide the legal, accounting, marketing, and management skills that they lack. As a critical mass of successful tech ventures were established, new accelerator programs began to obtain funding from private sources and the inflow of capital from angel investors and venture capital firms from various parts of the country increased.19
Pittsburgh’s reinvention required the city’s leadership to ‘think like a system and act like an entrepreneur’ – taking stock of assets, cultivating talent, and maintaining a good place to live, whilst taking risks, seizing opportunities and being flexible.20 Tom Murphy, a state representative who later became mayor of Pittsburgh, is regarded as one such leader. Recognising and supporting the role of universities in a post-steel Pittsburgh, he introduced the Ben Franklin Technology Partnership in 1983, dedicated to advancing early-stage startup businesses and the commercialisation of technologies – since described as a state programme run like a venture capital firm.21
After becoming mayor in 1994, Murphy developed more than 25 miles of new trails alongside the river and urban green space, and cleaned up more than 1,000 acres of abandoned industrial land.22 In more recent years, the city has improved its food and art culture, helping to attract skilled workers.23 This, combined with a consistently low cost of living, has helped Pittsburgh’s economic transition.24 Above all, however, this transition has been driven by the long-standing alliance between universities, local leaders, businesses and the civic community – and the return on investments made long ago.
Michael J. Madison, a Professor at the University of Pittsburgh, describes the city’s revitalisation as being less about the ‘grit’ and character of Pittsburghers (a popular narrative to explain the transition) and more about having economic diversification thrust upon it.25 But by building on strong research and innovation assets – UPMC, the University of Pittsburgh, and Carnegie Mellon University – the city has managed to excel in knowledge production. Pittsburgh’s education and technology sectors account for 80 percent of the high-wage jobs in the city.26 Overall, the technology sector accounts for a third of annual payroll in the Pittsburgh region, helping to retain highly educated young people.27 And in 2016 the region’s university research and development spending per capita was nearly two and a half times the national average.28
There are still threads connecting modern Pittsburgh to the rich legacy of manufacturing in the city. The advanced manufacturing clusters in the region are highly specialised: automation and industrial machinery, and metals and metal processing each have more than two times the national employment concentration. New clusters have formed around these industries as technology companies seek access to top engineering and computer science talent.29
However, the acceleration of scientific and technical activity and global expertise headquartered in the city has not translated locally into broad-based growth outside the clusters, and in the neighbourhoods in which they are sited.30 As Madison puts it, ‘steel money was sucked out of one part of the Pittsburgh region; new money is largely being injected elsewhere’.31 The risk is that, without new jobs being created at all skill levels, spatial inequality in the region will increase. The Brookings Institution recommends in particular that the Oakland innovation district needs to be marketed and better connected to the regional economy, with better integration with nearby employment centres.32
Pittsburgh’s history and resurgence has been much studied and analysed. Professor Michael Porter, considered the father of cluster theory, draws several lessons from Pittsburgh for other cities.33 First – and as we have seen – cluster growth is a long-term process with assets taking decades to develop. Second, diversification across several clusters helps strengthen the regional economy and to protect it against economic shocks. Third, research and development investment is critical, but so too is effective commercialisation mechanisms – and Pittsburgh faces challenges in this area (see below). Finally, strong and unified leadership is required to push for a regional cluster development programme.
A 2017 benchmarking report examined the prospects of Pittsburgh’s life sciences cluster, and found great opportunities for developing new solutions and innovations at the intersection with other clusters – automation, robotics, and healthcare – and with other areas of expertise – biomedicine at the University of Pittsburgh and computer science at Carnegie Mellon University.34 The blurring and crossover of disciplinary boundaries extends to collaboration with the private sector. The report gives the example of UPMC partnering with IBM Watson to form Pensiamo, a Pittsburgh-based startup using cognitive analytics to improve supply chain performance in hospitals.35
Pittsburgh’s clusters face several challenges. Commercialisation is lagging, in particular in life science firms, which often take longer to develop. Although investment trends are improving, the region has less venture capital funding than other US innovation hubs.36 Connected to this is a low rate of high-growth startups. One contributing factor is the need for more corporate partners (a barrier to recruiting talent to startups is the lack of backup employment options if the local startup does not succeed – a truly effective cluster, by definition, offers choice).37 And finally, ongoing challenges remain over continuing to build links between the research being conducted in universities and the strengths of industry, and ensuring a pipeline of skills to meet future workforce needs: fundamental concerns that remain constant even for well-established clusters.38
(Photos from Unsplash: bridge, skyline, freeways)
The Royal Society launched a policy briefing on research and innovation clusters today – I provided support for the analysis and wrote the case studies for Israel, Pittsburgh, and Uppsala.
The report is online here, and there’s a blog by Professor Richard Jones on Wonkhe introducing the report: can research clusters help level up the country? Research Professional also has coverage (paywalled article).
The 100 Resilient Cities programme resembled a large-scale urban experiment, with the strategies that many of the cities produced offering a rich source of information for analysis. Over 80 final strategies have been published; although cities from North America are overrepresented, there is broad geographic coverage.
As the previous iteration of the programme has ended, academic analyses of the strategies have continued to grow. For example, Taylor et al. (2020) use latent content analysis to assess how the resilience strategies of 14 cities in Europe, North America and Oceania conceptualise future uncertainty. Fitzgibbons and Mitchell (2019) examine the extent to which 31 resilience strategies focus on social equity and justice using content analysis; their sample included cities from the Global South and North.
I have compiled a spreadsheet of all the published strategies here (last updated July 2020). Please feel free to add any that I have missed. At the time of writing the 100 Resilient Cities website (home to most of the strategies) appears to be offline, so let me know if you would like access to the complete set of strategies, which I have both as PDFs and plain text files.
A new report published today explores how different sectors can work together to improve health outcomes at a regional level. I was delighted to be the lead author for this report with NHS Confederation, the Yorkshire & Humber Academic Health Science Network, and Yorkshire Universities.
Read the report 📖 (PDF), read the coverage in the Yorkshire Post 📰 or visit the campaign website 🌐.
Even before the pandemic, the government had given a clear commitment to ‘level up’ the regions, which means enabling regions to realise their full potential as part of an overall plan to narrow gaps in prosperity across the country. The economic aftershock of COVID-19 will hit communities hard – making the levelling up agenda more challenging but even more vital.
The report welcomes the growing focus nationally on both ‘health’ and ‘place’ – and sets out how we can align these with a bold ambition for improving quality of life and economic opportunities.
There is a particular focus on the tricky but vital mechanics of cross-sector collaboration, bringing together universities, local government, the health and care sector, business and communities. The traditional wisdom of carefully nurturing partnerships over time needs to be balanced by types of rapid response and new partnerships forged in the response to COVID-19. Read the full report here.
A version of this article also appears in ACEEU Spotlight magazine 📖
I enjoyed speaking on a lively panel yesterday about regional development and innovation as part of the UIIN conference, relocated successfully from Budapest to Zoom. Together with Matthew Guest from GuildHE we discussed how to better understand the local role of small and specialist providers.
The work builds on experimental alternatives to traditional economic impact studies. I first explored the idea of institutional heatmaps on a post here in 2018, and then expanded on this at a workshop in South Africa later that year. Over the past 12 months I have been working with GuildHE to ‘map’ the impact of some of their members. In yesterday’s presentation I set out why I think the traditional ‘big number’ approach to measuring economic impact is out of step with what places need from their universities. Below I go further and list why I feel these studies are, mostly, flawed endeavours. (I should add that these are my personal views, not those of GuildHE!).
You don’t have to look far to see economic impact studies. My former employer had a flagship biennial report with a steadily-increasing figure for the impact of UK universities – £21.5 billion to UK gross domestic product at last count – which it has used successfully for lobbying and campaigning. As long as this figure keeps increasing, everybody is happy. Many institutions have their own studies – £650 million of impact here, £400 million impact there – and often with LEP-level or regional disaggregation. Of course, such studies are not limited to higher education. We’re informed that shooting contributes £2 billion to the UK economy and supports the equivalent of 74,000 full-time jobs. Ornamental horticulture and landscaping contributed £24.2 billion to national GDP in 2017.
There are helpful academic papers which deconstruct the methodologies for calculating economic impact, and the common pitfalls. Instead, I want to challenge the preoccupation we seem to have with ‘one big number’ impact studies and what we lose in the process.
There are two shifts taking place which render the traditional impact study less effective:
I should note that economic impact studies are not all bad. It is helpful to see returns on investment, and to raise awareness that universities have economic clout and should be seen alongside other major industries. But they risk being a blunt instrument, obscuring what is often highly patchy and inconsistent local impact behind impressively large numbers. Economic impact studies need to be married to a rich understanding of local impact – perhaps through something like an institutional heat map combined with a survey of perceptions or social impact assessments.
Four further shortcomings that come to mind:
Above all, my concern is that economic impact analysis can mask inequalities and ‘cold spots’ in university engagement. Of course, heatmapping as an experimental alternative brings its own set of issues. Consistency between institutions, subjective judgements over the importance and intensity of shading, and the complexity of trying to map such a wide range of activity are issues that need to be resolved. But they may also expose quite starkly where a university is not working, and not having an impact – things that are hidden in the ‘one big number’ approach.
(Image credits: original images from Unsplash here and here.)
Yesterday Nesta published a report arguing that some parts of the UK have missed out on £4 billion of public research and development (R&D) funding each year, plus a further £8 billion of private sector investment. Some of these regions never fully recovered from the 2008 Great Recession, and COVID-19 threatens to deepen these divisions.
The Government’s target – set before the pandemic – called for the UK to increase investment in R&D to 2.4% of GDP by 2027, and by 3% in the future. The importance of this target is now greater than before. To meet it means empowering those regions with the lowest R&D intensity and recognising and supporting the vital role of universities and other partners in these regions.
Proposals in the report include devolving a substantial portion (25%) of the promised uplift in the R&D budget to nations, cities and regions, delivered through ‘Innovation Deals’.
The report also recognises how historic policy decisions have led to path dependency for regions, entrenching a set of ‘winners’ and ‘losers’. (This factor is missing in some – otherwise reasonable – recent reports which instead advocate building on existing centres of excellence). As the Nesta authors put it:
The current situation is the result of a combination of deliberate policy decisions and a natural dynamic in which these small preferences combined with initial advantages are reinforced with time.
Decisions made by previous generations of policymakers and politicians also play an outsized role in the UK’s industrial policy.
This excellent piece on efficiency and redundancy in the UK, and how we need more of the latter at the expense of the former to ensure resilience, is taken forwards nicely by Andy Westwood in this discussion of building industrial capacity in the UK. Building in redundant capacity is seen as a signature trait of a ‘resilient’ city or region. Andy sets out the case for starting with ‘national self sufficiency’ in health and manufacturing but then rapidly broadening out to other sectors, with a focus on impact at the local level. Movement towards autarky is a balancing act needing careful trade-offs, but there is a strong case for securing – or at least diversifying – supply chains in key industries and sectors.
The pandemic has drastically curtailed trade and investment; a return to previous patterns of international cooperation (which differ across UK regions) following COVID-19, and when trade picks up, is unlikely. More emphasis will be given to secure and resilient supply chains within the UK and near neighbours. This means strengthening industrial capacity and domestic manufacturing in the UK, and ensuring the provision of critical goods and services across the country – with clear implications for spatially-aware policymaking and an opportunity for rebuilding local economies.
These discussions neatly fit with a few themes I have touched on in recent posts – on how discussions over the smart city have morphed into ones about self-sufficient cities, on the risks of poor policymaking for resilience, and why popular narratives around ‘resilient communities’ are dangerous. See also this piece by Yorkshire Universities on The Coronavirus Pandemic: Universities and the Economic Recovery of Place.
